Utilities Skeptical of Air Board Cap & Trade Plan

California utilities asked to “pause” a draft state greenhouse gas reduction plan. They claim it places a disproportionate burden on the power industry while treading lightly on other businesses. “Each sector must take responsibility for their emissions,” wrote David Nahai, Los Angeles Department of Water & Power chief executive officer. “Electricity ratepayers must not be disproportionately burdened.” Utilities outlined their concerns in comments filed with the California Air Resources Board last week on its draft blueprint for carrying out the state’s climate protection law, AB 32. Northern California Power Agency attorney Susie Berlin said the plan seeks the electricity industry to “make more than 50 percent of the total statewide greenhouse gas reductions.” She noted the industry already emits “below its own 1990 levels.” AB 32 seeks to cut statewide emissions to their 1990 level by 2020. The draft plan--released in late June--envisions the industry moving to 33 percent renewable power by 2020, plus undertaking a massive energy efficiency program to cut use of electricity by its customers. It also would place the industry under an emissions cap-and-trade program However, the California Municipal Utility Association recommended that the Air Board allow utilities to opt out of the proposed cap-and-trade program and instead meet their emissions reduction requirements by investing in measures like renewable energy and energy efficiency. Currently, the plan does not evaluate these and other options for cutting greenhouse gas emissions, said Jerry Jordan, the association’s executive director. He recommended that the Air Board widen its evaluation of how to carry out the law to include such additional options. Sempra Energy asked the Air Board to evaluate carbon fees, at least for sectors of the economy the plan does not call on to proportionately trim their greenhouse gas emissions. Southern California Edison argued that to make a cap-and-trade strategy truly cost-effective, it must cover large numbers of businesses over as wide a geographic area as possible. Edison recommended that the Air Board “pause” on developing a state cap-and-trade program until either the Western Climate Initiative or Congress, respectively, develop a multi-state regional or national carbon market program. Under the initiative, a group of western states and Canadian provinces last month proposed a regional carbon cap-and-trade program. Congress is widely expected to pass climate change legislation after the Presidential election. Both Presidential candidates back a cap-and-trade strategy. The utilities also urged the Air Board to complete a delayed economic evaluation of its draft greenhouse gas reduction plan. Air Board staff have promised to release it in the second half of August. Editors’ note: For a more detailed version of this story, please see our sister publication E=MC2 – Energy Meets Climate Challenge. You can find it at www.energymeetsclimate.com.

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Utilities Skeptical of Air Board Cap & Trade Plan

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